Cabinet approves Rs 1,500 cr incentive scheme to promote recycling of critical minerals

New Delhi: The Union Cabinet on Wednesday approved a Rs 1,500-crore incentive scheme to promote recycling of critical minerals in the country.

The scheme aims at developing recycling capacity in the country for the separation and production of critical minerals from secondary sources.

"The Union Cabinet...today approved a Rs 1,500 crore incentive scheme," the mines ministry said in a statement.

The scheme incentives are likely to develop at least 270 kilo tonnes of recycling capacity every year resulting in around 40 kilo tonnes annual critical mineral production, resulting in about Rs 8,000 crore of investment and job creation--both direct and indirect-- of close to 70,000.

This scheme is part of the National Critical Mineral Mission which is aimed at building the domestic capacity of and supply chain resilience in critical minerals.

The government has approved a Rs 16,300-crore National Critical Mineral Mission, with a total outlay of Rs 34,300 crore spread over seven years, aiming to achieve self-reliance and accelerate India's journey towards green energy transition.

Critical minerals such as copper, lithium, nickel, cobalt and rare earth elements are essential raw materials required to fuel the growth of rapidly growing clean energy technologies.

According to the statement, the scheme has a tenure of six years from FY'26 to FY'31 and will provide incentives for the recycling value chain which is involved in actual extraction of critical minerals, and not the value chain involved in only black mass production.

"Eligible feedstock is e-waste, Lithium Ion Battery (LIB) scrap, and scrap other than e-waste & LIB scrap e.g. catalytic convertors in end-of-life vehicles," it said.

The scheme will be applicable to investments in new units as well as expansion of capacity, modernisation and diversification of existing units, the statement said adding that expected beneficiaries will be both large, established recyclers, as well as small, new recyclers which includes start-ups, for whom one-third of the scheme outlay has been earmarked.

"The incentives under the scheme will comprise 20 per cent capex subsidy on plant and machinery, equipment and associated utilities for starting production within specified timeframe, beyond which reduced subsidy applicable; and Opex subsidy, which will be an incentive on incremental sales over the base year (2025-26) viz. 40 per cent of eligible Opex subsidy in the second year and balance 60 per cent in the fifth year from 2026-27 to 2030-31 on achievement of specified threshold incremental sales," it said.

In order to ensure greater number of beneficiaries, total incentive -- capex plus opex subsidy -- per entity will be subject to an overall ceiling of Rs 50 crore for large entities and Rs 25 crore for small entities, within which there will be a ceiling for Opex subsidy of Rs 10 crore and Rs 5 crore respectively.

The critical mineral value chain comprising exploration, auction and mine operationalisation, and acquisition of foreign assets, has a gestation period before they could supply critical minerals to the domestic industry.

A prudent way to ensure supply chain sustainability in the near term is through the recycling of secondary sources, it said.